By Capt. Paul Ferguson, Office of the Staff Judge Advocate Legal Assistance AttorneyMarch 12, 2018
FORT RUCKER, Ala. -- Service members may qualify for a number of benefits related to student debt, but some effort is required to take full advantage of these benefits. Here are a few options that might make paying back your loans less of a burden.
• Lower the interest rate for all your loans. If you are serving on active duty, you're eligible to have your interest rate lowered to six percent on all student loans (both federal and private) that were taken out before your active duty service began. You can submit your request up to 180 days after leaving active duty and the lower interest rates will be applied retroactively for the entire period of your active duty service. In order to take advantage of this benefit, you should inform your student loan servicers that you'd like to lower your interest rate under the Servicemembers Civil Relief Act. Your servicer will likely need a written request and a copy of your orders to take advantage of this benefit.
• Manage your federal student loans. You may be eligible to lower your monthly payments for federal student loan debt today and may also qualify for Public Service Loan Forgiveness after 120 qualifying monthly payments (10 years).
To qualify for these benefits, you must have a qualifying loan. Only federal Direct Loans are qualifying loans for PSLF. You can learn more about your loans at nslds.ed.gov.
Here are a few benefits to consider once you determine that you have a qualifying loan:
Enroll in a qualifying payment plan. Income- Based Repayment can be the best payment plan for many borrowers. IBR sets a low monthly payment based on your income, allowing you to make progress toward 120 on-time qualifying payments and loan forgiveness. To get started, enroll online studentloans.gov or contact your student loan servicer.
Certify that you work for a qualified public service employer. Contact your student loan servicer to get the Employment Certification for PSLF form to qualify for loan forgiveness. You'll need your employer to complete and sign the form.
If you have newer loans, you may be able to lower your monthly payment even further. Pay As You Earn is a different payment plan that offers lower monthly payments than IBR. Eligible borrowers must have at least one new loan made after Oct. 1, 2011, and have no federal loans from before Oct. 1, 2007. Learn more at studentloans.gov.
• Ask your servicer about other options for your federal loans.
Reduce your interest rate to zero -- While you are serving in an "area of hostility" that qualifies you for special combat pay, you may not have to pay interest on Direct Loans made on or after October 1, 2008, for up to 60 months.
Cancel your Perkins Loans. Perkins Loan borrowers serving in an area of hostility for more than 365 days may be eligible to have their loan balance reduced for each qualifying year of service. Contact your servicer to apply.
Be wary of military deferment. Military deferment may be available for some service members if you're on active duty or in the National Guard during certain qualifying times. But be aware, if you have an unsubsidized loan, the unpaid interest will cause your total debt to grow.
• Manage your private student loans. If you're having trouble making ends meet and you're serving on active duty, you may be eligible to postpone private student loan payments through deferment or forbearance options. Be aware that while the terms of alternative payment plans will vary, the interest on your loans will continue to grow even after you stop making payments.
You should consider your options. For most service members, it's better to pay your private student loans if you can. If you can't afford to repay your loans while you're on active duty, ask your servicer about interest-only payments instead of deferment or forbearance. This will stop your loans from growing and may still provide you with some short-term relief.
• Need help with a student loan issue? If you have issues with your loan servicer or debt collector, you can file a complaint with the Consumer Financial Protection Bureau. Once filed, the CFPB will forward your complaint to the company and work to get a response from them. To learn more or to file a complaint, visit cfpb.gov/complaint or call 855-411-CFPB (2372).
For those who qualify for legal services, you may also seek help by contacting the Fort Rucker Judge Advocate General's Corps Legal Assistance Office by calling 255-3482.